Fixed IncomeChoose a global leader for your fixed income investments.
It’s not just about income
Fixed income investments are a good choice for protecting wealth as well as delivering income from your portfolio.
A big market to choose from
A giant among the asset classes, fixed income offers many choices for diversification, income and capital protection.
Access to more options
Investing in fixed income with Schroders gives you the reassurance of active management across this wide range of opportunities.
Bonds: a good choice for wealth protection
Bonds are the most common type of fixed income investment. When you buy a bond from a government or company, you’re lending them money and you can expect your original investment back on an agreed date.
Most of the time you can count on getting your money back. But there are companies that go bust or even governments that can’t pay back their debts and this is why some bonds are riskier than others. Each bond is rated by credit agencies so investors know just how secure their fixed income investment is likely to be.
Income is locked in
In return for your fixed income investment, you’ll get regular ‘coupon’ payments of a fixed amount. It’s a bit like an interest payment with the rate locked in. So, if you hold the bond to maturity, you know exactly how much income you’ll get and when.
Other ways to earn from fixed income
There can be other ways to get income from bonds. Buying bonds on the primary market means you’re buying them from the issuer. But there is a secondary market for bonds, where investors can buy and sell bonds at their current value. If the market considers your bond to be worth more than you originally paid for it, then you can make an extra return on your fixed income investment.
What to watch out for
Fixed income investments are a good choice for the part of your portfolio you want to be more protected from market ups and downs. They’re known as a defensive asset because they’re less likely to be affected by an economic downturn compared with growth assets like equities.
But fixed income investments can still go up and down in value. If interest rates are rising, for example, this can lead to bond values falling in secondary markets. Bonds look a lot less attractive to investors when their rate of return is less than an interest-bearing bank deposit, for example. And when inflation is high, there is a risk that the return from bonds isn’t keeping up with rising prices which means the real value of your wealth invested in bonds could be going backwards.
Protecting your wealth, enhancing returns
As a defensive asset class, fixed income investments can protect your investment portfolio when growth assets are experiencing the impact of market and economic changes. They can also deliver reliable income and play an important role in diversifying your investments.
Fixed income is an asset class suited to investors seeking capital preservation and income for a small or core component of their portfolio. They can be a good choice if you have a medium to high risk and return profile. Fixed income funds are unlikely to be suitable when you’re looking for capital growth or high returns from your investments.
Reap the benefits of diversification
As a global leader with 20 years’ experience in fixed income in Australia, Schroders offers detailed knowledge and comprehensive coverage of this large and complex asset class. It’s a strength that helps us deliver fixed income investments that are truly diversified from equity assets in your portfolio.
As an active manager, we stay across fixed income opportunities as they evolve and the market and economic landscape change. You’ll find our 300+ global fixed income team in 38 offices around the world* and they offer specialised, on-the-ground insights and analysis on the broad and varied fixed income universe. You can take confidence in our fixed income capability and expert team focused on driving returns without losing sight of the important mission of preserving your wealth.
* As at 30 June 2022
We’re on top of the whole spectrum of fixed income
It takes attention to detail to make sure our fixed income strategies hold up when markets take a turn. That’s why we put 1,000 bond issuers under the microscope every year as well as reviewing economic forecasts and market analysis.
We use these insights to select the best opportunities from Australian and global fixed income to build our portfolios and meet investors’ capital preservation and income goals.